d2 capital partners: general intro to scope of services

D2 Capital PartnersCreation ∙ Deployment ∙ Structuring

Introduction to D2 Capital Partners

D2 Capital Partners

Scope of Services Presentation

Creation ∙ Deployment ∙ Structuringwww.d2capitalpartners.com

D2 Capital PartnersOnshore Access • Global Platform

D2 Capital is an independent, privately owned, investment and advisorypartnership. It is active across the spectrum of investment assets whilstsimultaneously applying he accumulated global capital market experience of itsteam to a diverse range of advisory situations. D2C is unencumbered byconvention. It is flexible, focused and innovative in the provision of niche solutions.

Where we fit into the capital process :

I. Creation – we raise capital for companies

II. Deployment – we assist strategic and financial investors withdeployment of capital

III. Structuring – we structure the best-fit, most effective andinnovative solutions

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D2 Capital Partners

PURPOSE: Raising growth capital: At the earliest stages of the life-cycle

Forging synergistic relationships betweencompanies

Structure financial investment partnerships toprepare a company for IPO exit

D2C ROLE: We act as both advisors tobuyers and sellers, management in ourprinciple investments and consultants inpost-deal monitoring services

COUNTERPARTIES: We advise companiesin raising capital or advise private equityinvestors in their deployment strategy.

PROCESS: We in assist in designingbusiness plans, writing informationmemorandums, building financial modelsand drafting term sheets

Start-upGrowth

CompanyCash Flow

Positive

From VC to PE, we help accelerate the growth paththrough growth capital raises…

Venture Capital involves start-up and early stagecompanies requiring funds for growth

Seller

FinancialInvestment

StrategicPartnership

Private Equity involves private profitable companiesseeking expansion capital or strategic partnerships

Venture Capital & Private EquityInvestments

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D2 Capital Partners

Leveraging Vietnam’s Entrepreneurial Spirit Aiming to be the leading business partner

NewVenture

DomesticPartners

Investors

ForeignPartners

ProfessionalManagement

More on Venture Capital: Incubation

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PURPOSE: Create and start new ventures

D2C ROLE: Apply creative intelligence,vast network and market knowledge tostarting, funding and managing newventures

COUNTERPARTIES: Foreign / domesticinvestment funds, domestic / foreigncompanies, local / expat professionalexperts / management

PROCESS: Develop the business plan,build financial forecasts, research thetarget market, hire management team,establish local and foreign partnerships,obtain licensing, connect customers andraise venture capital.


D2 Capital Partners

PURPOSE: Assist global / domesticcompanies structure partnerships via: Direct purchase of ownership

Issuance of new shares for growth capital

Setup of new Joint Ventures

D2C ROLE: We act as advisors to eitherthe buyer seeking acquisition targets orsellers requiring strategic partners

COUNTERPARTIES: Transactions involveglobal and / or domestic companiesacting as either buyers / sellers

PROCESS: The scope of work requiresextensive preparation of investordocumentation, regulatory filings,financial due diligence, marketingmaterials and road-shows spanningmany months and even beyond a year

CompanyA

CompanyB

CompanyA-B

To partake in Vietnam’s across-the-board growth curve,strategic interest is driving M&A demand…

MERGERS are the combination of two companies into onelarger entity…

Acquirer

Target A

(90% Stake)

Target B

(100% Stake)

Target C

(70% Stake)

ACQUISITIONS are the purchases of part or all of an assetor company by another company…

Mergers & Acquisitions (M&A)

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D2 Capital Partners

Need capital to fund growth but don’t want to sell equity or raise debt?

Not enough management resources to scale higher growth core business?

Restructurings allow companies to unlock capital trapped in underperforming assets

Divestments in businesses where management is inexperienced to focus on core growth

Immediate value creation that can be realized by the capital markets (i.e. stock price)

Ca$h Proceeds

Sometimes more is less; Allocate capital where it grows best

Restructurings & Divestments:Shedding Fat for Leaner Growth

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Post-AssetDisposal

Pre-AssetDisposal

Non-Core Asset


D2 Capital Partners

Sell-Side Advisory: Managing the CapitalRaising Process

DOCUMENT PREP (3 – 4 WEEKS):

• Draft Business Plan / Investment Memo

• Financial Forecasts

• Valuation Model

MARKETING PREP (1 – 2 WEEKS):

• Finalize Potential Buyers List

• Draft Teasers

• Write and Coach Investor Presentation

MARKETING (3 – 4 WEEKS):

• Teaser Dissemination

• NDA & Investor Document Release

• Presentation to Investors

BIDDING PROCESS (1 – 2 WEEKS):

• Determination of Final Round Investors

• Draft Term Sheet

• Coordinate Investor Due-Diligence

DUE-DILIGENCE (6 – 12 WEEKS):

• Management Meetings

• Facility Tours

• Data Room Visits

NEGOTIATIONS (2 – 4 WEEKS):

• Finalize Purchase Agreements

• Finalize Shareholder Agreements

• Obtain regulatory approvals

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TOTAL TIME FRAME:16 – 28 WEEKS


D2 Capital Partners

Buy-Side Advisory: CapitalDeployment Strategy & Execution

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INDUSTRY / SECTOR ANALYSIS:• Determine industry / sector trends• Segment value-chains• Identify growth drivers

TARGET MAPPING:• Categorize key players• Matrix SWOT and comparable metrics• Short-list preferred targets

COMPANY MEETINGS / PROFILES:• Gather key operating metrics• Business model descriptions• Trends and developments

INVESTMENT DUE DILIGENCE:• Stress test forecast assumptions• Comprehensive valuation models• Coordinate legal due diligence

NEGOTIATIONS & STRUCTURING:• Customize deal structure• Buffer hostility through intermediation• Negotiate buyer’s terms & conditions

Locking inthe Target!!!


D2 Capital Partners

Our Partnership Lasts Through-outthe Entire Company Lifecycle

Venture Capital

• Start-Up

• Early Stage

Private Equity

• Capital Raise

• Strategic Partnership

Listing

• Initial Public Offering(IPO)

• Secondary Issuance

M&A

• Takeovers

• Carve-outs

• Consolidation

Restructurings /Divestments

• Asset Disposal

• De-listing

• Privatization

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D2 Capital Partners

Common Ground:Elements of a Successful Deal

Timing Approaching the market when it is favourable increases your

likelihood of success.

Pricing Understanding the relationship between the value of the company

and the context of the market will assist in deriving a reasonableprice.

Broad Scope Willingness to accept a broad range of partners.

Representation and Marketing Positioning is critical with investors; professional representation will

improve likelihood of a successful transaction.


D2 Capital Partners

Our Services : Preparation of a detailed business plan, stress testing the financial forecasts,structuring key terms and conditions and conducting all face-to-face negotiations with the buyer.

Outcome: The deal was successfully closed and growth capital provided for the next phase ofexpansion of the Group.

CASE 1: Growth Capital Financing into Vietnamese Media Group

CASE 2: Strategic Partner for Vietnamese Consumer Goods Company

Our Track Record in Vietnam

Investor : International Private Equity Group

Target : Leading Vietnamese Media Group

Our Services : D2 Capital represented the company in selling equity to a global bank. This wasthe first investment in Vietnam undertaken by the bank and the transaction required intenseperiods of document preparation as well as negotiations with both the offshore investmentcommittee and onshore opposing counsel.

Outcome: Terms were concluded to the satisfaction of both sides and the bank continues to be ashareholder three years later.

Investor : Global Investment Bank

Target : FMCG manufacturer and distributor

Our Role : Represented the seller

Deal Size: Approximately US$ 20mn

Our Role : Represented the seller

Deal Size: Initial round of approx. US$ 5mn


D2 Capital Partners

Our Services: Represented investor in structuring, performing due diligence and negotiating anequity investment.

Outcome: D2 Capital worked with both sides to bridge cultural differences to find commonground for investment.

CASE 3: Growth Capital Financing of Vietnamese Technology Company

CASE 4: Growth Capital Financing of Vietnamese Healthcare Company


Investor: Malaysian Financial Investor

Target: Leading Vietnamese Tech Company

Our Services: Prepared all investment marketing materials, financial and valuation models; D2Capital marketed the transaction globally, identifying over 15 interested investors.

Outcome: The company selected one investor, and D2 Capital negotiated on behalf of thecompany to achieve a very successful fund raising.

Investor: Singaporean Financial Investor

Target: Vietnamese Healthcare Company

Our Role: Represented the Seller (“Target”)

Deal Size: Under US$ 5mn

Our Role: Represented Buyer (“Investor “)

Deal Size: Approx. US$ 2mn


D2 Capital Partners

Our Services: Executed the acquisition on behalf of the buyer for all of the outstanding shares ofthe target company through open market trading and negotiated block purchases.

Outcome: D2 Capital negotiated with all shareholders and completed the acquisition of all of theoutstanding shares of the company.

CASE 5: Strategic Acquisition of Vietnamese Construction Company

CASE 6: Strategic Partnership for Vietnamese FMCG Distributer


Investor: European Strategic Investor

Target: Publicly Listed Vietnamese Company

Our Services: Prepared detailed business plan, financial model and investment structure optionson behalf of the seller to secure growth capital and strategic partnership

Outcome: Transaction negotiated and closed within less than three months. In a gesture of goodfaith, the Korean investor provided bridge financing for the seller until all legal procedures werecompleted in order to support growth prior to official disbursement of capital.

Investor: Korean Strategic Investor

Target: Vietnamese FMCG distributor

Our Role: Represented Seller (“Target”)

Deal Size: Under US$ 5mn

Our Role: Represented Buyer (“Investor”)

Deal Size: Over US$ 10mn


D2 Capital Partners

Our Services: D2 Capital packaged the seller and worked with management to coach them onhow to speak with the investors; Assisted in the structuring and negotiation of the strategicpartnership and equity sale to a Japanese conglomerate (over 100x larger than the target).

Outcome: We worked between management and legal teams to find the ideal solution for ourclient.

CASE 7: Advisory of Japanese Strategic Investment into Sector Leader

CASE 8: Advisory of South African Strategic Investor into Vietnam Companies


Investor: Japanese Strategic Investor

Target: Construction Materials FIE

Our Services: Represent the foreign buyer in seeking Vietnamese companies for strategicinvestment offering industry mapping, valuation and negotiation services; D2 Capital met with30 leading Vietnamese companies, and recommended acquisition targets, valuation andstructuring.

Outcome: Negotiations currently underway

Investor: South African Strategic Investor

Target: Vietnamese Technology Companies

Our Role: Represent Buyer (“Investor”)

Deal Size: N / A

Our Role: Represented Seller (“Target”)

Deal Size: Over US$ 10mn


D2 Capital PartnersBringing Great Companies to Investors

The principals at D2 Capital have decades of experience working withmanagement teams of both large and small companies.

We are specialists in preparing and structuring companies forintroduction to institutional and strategic investors.

We have completed over 120 company road shows globally, comprisingof thousands of meetings, and raising billions of dollars.


D2 Capital Partners...a few of our Marketing Clients.


D2 Capital PartnersEnd Game

Ultimately, D2 Capital Partners seeks to:

Execute quickly; we do not want to waste your time or ours.

Achieve maximum valuation; we want the best price as wehave incentives to do so.

Create longevity; we consider our clients as partners withthe potential for follow-on business opportunities.

Establish credibility; by showcasing our clients as reliablebusiness partners, they can access the capital markets forfuture transactions with better terms.


D2 Capital PartnersV. Appendices

With more than forty years of combined, international, capitalmarket experience, D2C is defined by Capital :

Creation

Deployment

Structuring

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D2 Capital PartnersThe Scope of Our Partnership

VC and PE Investment

Business Plan Preparation

Capital Structuring

Deal Negotiation

Due Diligence

Industry Mapping & Competitive Analysis

Post Deal Monitoring

Strategic Advisory

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D2 Capital PartnersWhat Has Changed

The Bad News

VN remains on periphery of regional investment universe

Risk appetite of overseas funds for high risk, emerging assets is stilldepressed

The quality of onshore capital market advisors lags far behind that oflawyers and accountants

The Good News

Strategic investor interest is rising

Specialist financial investors get more access opportunity

Funding costs are low

Less noise = more deals can be done but …

Preparation and structuring is critical

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D2 Capital Partners

Units inUSD bn

1H 2009M&A

1H 2008M&A

% Change

World 914.04 1,573.33 -41.9%

USA 289.36 569.07 -49.2%

China 38.29 62.33 38.6%

SE Asia 18.56 49.94 -62.8%

Vietnam 0.23 0.471 -50.7%

0

5

10

15

20

0

500

1000

1500

2000

2003 2004 2005 2006 2007 2008

USD

mill

ion

s

Total Value (USD mn) Average Deal Value

Vietnam M&A Slowdown… Declining Capital Flows…

-22.5% YoY

-61.5% YoY

-76.3%YoY

-

10.0

20.0

30.0

40.0

50.0

60.0

China SE Asia Vietnam

USD

mill

ion

s

Average M&A Deal Size 1H 2009 Average M&A Deal Size 1H 2008

Shrinking Size …-38.6% YoY

-62.8% YoY

-50.7%%YoY

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

China SE Asia Vietnam

USD

mill

ion

s

Transaction Value (1H 2009) Transaction Value (1H 2008)

Vietnam Has Seen V Little …

Poor Access + Uncertain Legal Framework =

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SOURCE: Reuters, Price Water House Coopers, D2C Research


D2 Capital PartnersRational Behaviour, Finally

Investors into VN are more cautious, and getting much betterprepared, than at anytime in the past .

Competitive and industry analysis

Substantially more comprehensive terms, reps and warranties

Detailed due diligence

Post Deal monitoring

This requires that sellers step up to the challenge and meet theseneeds if they want the capital.

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D2 Capital Partners

Detailed Business Plan Growth strategy Use of proceeds Clear exit options

Financial Forecast Model & Valuation De-risked model assumptions Return profile sensitivities

Structure Equity, Debt, Hybrid

Improve credibility Expedite investment process Magnify marketing coverage Outsource non-core competencies Enhance position in negotiations Expand financing options Receive expert coaching Obtain protection

Preparation is Key Seek Professional Help

Expect post-deal monitoring byPartner or third-party contractors

Solidify trustworthy relationship Instill culture of Corporate Governance Leverage network synergies Minimize misunderstandings

Transparency Convey rationality Understand / Satisfy your partner Bridge the gap Opportunity cost / Time value Loosen terms & conditions Engineer alternative financing

Flexible Pricing

Improving Probability of Completion

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D2 Capital PartnersMost Common Deal Tripwires

Deals tend to flounder on a regular series of factors, many of whichmay be international practice - but in VN it is all innovation …

Emotional Seller Premium

Contingent Risks – especially from earlier raise

Validity of Documents – are licenses even real ?

Failure to Launch – understand the need

Veto Rights – some things require permission

Options – to put or call

Avoid/fix these and your chances just improved sharply

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D2 Capital Partners

Most Attractive /Achievable Exit Strategy

SOURCE: Grant Thornton Private Equity Survey 2009, D2C Research

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Case Study 1: Proactive Preparation

30.40%

21.70%

26.20%

13.10%

4.30%4.30% IPO

Trade Sale

Secondary Sal

MBO

Refinancing

Other

Key Takeaways Lack of information hindering deals

requiring strategic investors to pay forprofessional insight and intelligence.

Companies providing better cooperationcalm investor concerns

Strategic Investors are actively preparingfor potential partnerships and so shouldinterested companies: improve your rankingon investors’ list of priorities!

Strategic sales still attractiveEasing Investor Pain

Background

CONTEXT:Strategic Investors in Education, Media, Alternative Energyand Construction Materials, sought / seeking potential JVand / or M&A targets in Vietnam.

PREPARATION:Macro Overview Industry Analysis Sub-sector analysis Competitive Analysis Target DD

STRUCTURE: Potential JVsM&A

EXECUTION: Industry / Sector mapping, interviews Potential JV Partner / Target Negotiations


D2 Capital Partners

Investor Concerns WhenInvesting in Vietnam


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22.40%

18.40%

14.30%

12.20%

10.20%

8.20%

4.10%

4.10%

4.10%

2.00%

Transparency in business activities

Operational / Cultural Fit

Growth story / Forecasts

Target's management support

Strategic fit

Cash flow

Speed which value can be created

Tax shields and investment savings

Brands / Products

Track record

Addressing Investor Concerns

Key Takeaways International caliber work and document

packs enhanced management credibility Professional sell-side advisory services

ensured necessary provision of informationto investors for faster decision turnaround

Structuring advice provided multiplesolutions to potential deal killers

Coaching of management enhancednegotiation techniques with investors

Background

CONTEXT:FMCG distributor & retailer sought equity capital raise toexpand into mass distribution. Regulatory hindrances insensitive sector to foreign participation required extensiveprofessional advice. Transaction closed in <3 months

PREPARATION: Investment Teaser Business Plan Formulation Detailed Forecasts & Valuation Model

STRUCTURE: Straight Equity Convertible Bond (Loan) Bridge FinancingCall Option for Ownership Rights to FMCG Co.

EXECUTION: Investor Road Show Term Sheet Discussions

Appear Serious

Case Study 2: Professional Help


D2 Capital Partners

Measuring InvestmentSuccess in Vietnam


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Case Study 3: Flexible Pricing

Structuring Investor Returns

67%

13%

8%

8%

4%IRR obtained on exit

Dividends received

Successful integration

Improved revenue

Cost savings

Returns Attract Investors

Key Takeaways Detailed strategy & model frame-worked

and expedited discussions Management flexibility and rationality

instilled greater trust in management Return windfall protection alleviated

investor concerns KPI benchmark linked performance ensured

alignment of interests with investor

Background

CONTEXT:Professional Services Company sought capital raise withstructured equity bonus conversion feature.

PREPARATION: Investment Teaser Business Plan / Investment Memorandum DraftingInvestor Presentation & Coaching Detailed Forecasts & Valuation Model

STRUCTURE: Standard Terms & Conditions Convertible Bond KPI Benchmark Bonus Equity Kicker

EXECUTION: Investor Road Show Term Sheet Structuring Negotiations


D2 Capital Partners

Important InvestmentConsiderations / Factors


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21.40%

21.40%

18.70%

11.40%

11.40%

15.70%

Corporate Governance

Skills / Experience ofexisting management

Lack of transparency

Finance / debt issues

Key Takeaways Unwillingness to provide full transparency on legal

documents can endanger deal Eventual cooperation by management lead to a

partnership with the new investor for MBO / LBOof existing shareholders in Holdings subsidiary

Offshore investors now requiring extensiveprofessional due diligence support and buy-sideadvisory services.

Third party post-deal monitoring also becoming ofgreater importance to offshore investors withlimited man power, experience and resources in VN

Being fair and open matters

Background

CONTEXT:Well established and rapidly growing services companysought equity capital for new venture; however, clause inshareholders agreement from previous investor presentedconsiderable risk and liability to new investors.

PREPARATION: Investment Due Diligence ReportModel Assumptions Sensitivity Testing Legal Due Diligence Report

STRUCTURE: Standard Terms & Conditions Straight Equity at Holdings Group LevelMBO / LBO carve out at Subsidiary Level

EXECUTION: Location Inspections D2C Supported Negotiations

The Truth Reveals Itself

Case Study 4: Corporate Governance


D2 Capital PartnersContact Information

Vietnam Office:5th Floor, Nam Minh Long Building61A Vo Van Tan, District 3HCMC, Vietnamwww.d2capitalpartners.com

Spencer White, Managing PartnerEmail: [email protected]: +84-907-009-112Ian Nguyen, Vice PresidentEmail: [email protected]: +84-934-164-716

Christian Leitzinger, Managing PartnerEmail: [email protected]: +84-902-250-393Tat Sun Ho, Vice PresidentEmail: [email protected]: +84-121-728-8080

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